The Great Moderation Consensus Among Macroeconomists Is That Fiscal Policy

question 147

Multiple Choice

The Great Moderation consensus among macroeconomists is that fiscal policy should be used sparingly because:

• A) it cannot be effective.
• B) of policy lags.
• C) it always destabilizes the economy.
• D) of the risk of government waste.

---

Definitions:

IRR

Internal Rate of Return, a financial metric used to estimate the profitability of potential investments through calculating the rate of return where the net present value of all the cash flows (both positive and negative) from a project or investment equal zero.

Payback Period

A rephrased definition: The duration needed to recover the initial expenditure on an investment through the cash flows it generates.

AAR

Average annual return, indicating the mean yearly profit or loss generated by an investment over a specified period.